McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Service Products, Services, Intangibility, Inseparability, Perishability, Off Peak Pricing, Client Relationship, Customer Effort, Uniformity, Tangibles, Reliability, Responsiveness, Assurance, Empathy, Internal Marketing, Continual The Marketing of Services Chapter 12 Key Terms

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Services  Service Products – A bank loan or home security that are intangible  Services – Activities by sellers and others that accompany the sale of a product and that aid in its exchange or its utilization

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Important Characteristics of Services  Intangibility – Without physical dimensions or characteristics  Inseparability – Service and seller are inseparable  Perishability and Fluctuating demand – Seasonal, days, time of day, vacant seats, waiting time on phone  Off-peak pricing  Client Relationship – Similar to customer relationship but typically more intense

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Important Characteristics of Services  Customer Effort – Customer involvement is at a greater degree in production of many types of services  Uniformity – Quality of services can vary more than the quality of goods

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Unique Characteristics Distinguishing Services from Goods

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Quality Service  Quality service generally suffers due to the gap between  Consumer expectations and management perceptions of the consumer expectations  Management perceptions of consumer expectations and firm’s service quality specifications  Service quality specifications and actual service quality  Actual service delivery and external communications about the service

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Quality Service  Determinants of service quality include  Tangibles  Reliability  Responsiveness  Assurance  Empathy

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Customer Satisfaction Measurement  Understand the expectations and requirements of the customer  Determine how well your company and its major competitors are delivering these expectations and requirements

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Customer Satisfaction Measurement (CSM) – Research  Common aspects  Marketing and sales personnel primarily responsible for designing CSM programs  Top management and the marketing function championed the programs  Combination of qualitative and quantitative research methods  Evaluations included both the company’s and competitor’s satisfaction performance

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Customer Satisfaction Measurement (CSM) – Research  Results of all research were made available to employees, but not to customers  Research was performed on continual basis  Customer satisfaction was incorporated into the strategic focus of the company  Commitment to increasing service quality and customer satisfaction from employees at all levels within the organization

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved The Importance of Internal Marketing  Critical components  Careful selection process in hiring frontline employees  Clear and concrete message conveying a particular service strategy  Significant modeling by managers  Energetic follow-through process  Emphasis on teaching employees to have good attitudes  Emphasis should be placed on the word continual

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Obstacles in Service Marketing  Four reasons for the lack of innovative marketing on the part of service marketers  Limited view of marketing  Lack of strong competition  Lack of creative management  No obsolescence

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Service Challenge  Constantly develop new services that will better meet customer needs  Improve on quality and variety of existing services  Provide and distribute services in a manner that best serves the customer

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Banking  Banking is becoming an increasingly technology- driven business  Home baking systems  Banks have also learnt the value of bundling services  ATM transactions  Interest bearing checking accounts  Most banks target some marketing activities towards senior citizens

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Health Care  Health Maintenance Organization – Alternative delivery systems  Benefits  Ability to have all ailments treated at one facility  Payment of fixed fees for services  Encouragement of preventive versus remedial treatments  Success of HMO has inspired similar programs for dental and eye care

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Insurance  Insurance industry offers several new products and services  Distribution of insurance services have increased  Availability of travel auto insurance through AAA  Group insurance written through employers and labor unions

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Travel  Airline industries have been the leaders in the use of technology  Use of Internet sites to dispense flight and fare information  Technology helps airlines to make strategic pricing decisions through the use of yield management  Use of elaborate computer programs enable managers to determine customer segments

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Implications for Service Marketers  Sum total of marketing mix elements represents the total impact of the firm’s marketing strategy  Services must be made available to prospective users  Varying service bundles, new technology, and alternative means of distributing the service enable targeted marketing